1. Business Model Attributes Value Proposition How to create value for customer (lower cost or raise differentiation) Identify market segments Under-served, over-served or never served customers How will customer pay (subscription, lease, purchase)? Value Chain What activities are required to make, sell, service the product? Cost is based on summing the value chain elements Cost Structure and Profit Potential Value Network Competitive Strategy

2. Business Model and Strategy Business model how to link specific products and markets (customers) how to create and deliver value to the customer how to make money on products Strategy how to capture and sustain value (barriers to entry, position firm in a value network how to gain economies of scale and scope across businesses how to tailor sets of activities uniquely for cost or differentiation

3. Value Networks Ethernet - Ungermann-Bass was first-mover but tied to Unix workstations. 3C chose PCs instead, identified independent resellers and Novell OS as complementary assets Adobe - leveraged efforts of Apple, IBM, Canon, and HP. Focused on supplying digital font libraries to laser printer and software manufacturers. Postscript became de facto standard Synoptics- was able to sell into an installed base of IBM token ring copper wire by enabling faster network transmissions Metaphor - mining large databases, bundled with its own hardware, direct sales force Liveworks - electronic whiteboard, tried to make own product, not license Documentum – studied customers’ document management problems and learned how to integrate product with installed base of hardware/software

4. Adaptive Learning Treat the first business model as an initial hypothesis Adapt sequentially to new information and possibilities Technological and market uncertainties are resolved by probe and learn methods (e.g., customer, value network, standards) May need to be liberated from parent organization in order for adaptive learning to succeed